A question of when, not if

Andy Blatchford
REP

For the Bank of Canada these days, it’s all about timing.

The central bank stuck with its benchmark interest rate of 1.25 per cent Wednesday as it continued along a careful process of determining the appropriate juncture for its next hike.

“Governing council has agreed that, over time, the economy would appear to be warranting higher interest rates _ our uncertainty is about how much and at what pace,” governor Stephen Poloz told a news conference that followed his latest rate announcement.

“For us, the case is clear _ interest rates are very low considering that the economy is pretty well at capacity, inflation’s at two per cent.

“So, there is a sense that, almost by law of gravity, interest rates will move somewhat higher over time _ but again, the pace is a significant question mark for us given the data.”

The latest rate decision comes at a time of moderating growth following a strong 2017. Inflation is also running close to its ideal target and wage growth has strengthened with a tightening labour force.

Poloz, however, said that despite the recent improvements, the economy’s still unable to continue running at full tilt without the stimulative power of lower rates, at least for a little longer.

He listed four downward forces still weighing on the economy _ all of which have come under close scrutiny by a central bank that has been describing itself as data dependent.

Two of these sources of uncertainty _ inflation and wage growth _ were highlighted as areas showing particular progress.

On inflation, Poloz said recent readings have been “very reassuring” with both the headline and core rates near its two per cent bull’s-eye.

Wage growth, he said, has increased significantly over the last 18 months to reach the three per cent range, although the bank noted the measure remains below what would be expected if the economy no longer had slack in its labour force.

The bank will also continue to watch two other areas of uncertainty: the economy’s sensitivity to higher interest rates and how well it builds capacity through business investment.

On capacity building, Poloz said he believes Canada now has a little more room to expand further, beyond what the bank sees as the economy’s potential growth _ and all without driving up inflation.

When it comes to the impact of higher rates, Poloz said even with the inflated debt loads of Canadian households, recent data has shown moderation in credit growth.

Poloz reiterated Wednesday the bank would remain cautious when it comes to future increases.

Following the rate announcement, many experts stuck with their calls that the bank will introduce its next hike in July.

Poloz has raised rates three times since last summer following an impressive economic run for Canada that began in late 2016, but his last hike came in January.

Throughout this period, the bank has also kept a close watch on the evolution of external risks.

Exports and business investment in Canada have been held back by competitiveness challenges and trade-policy uncertainties, which include escalating geopolitical conflicts that risk damaging global expansion, the bank said.

It laid out estimates on the growth impacts on Canada due to tax reforms in the United States, which are expected to lure more investment south of the border. Due to these investment challenges, it predicts Canada’s gross domestic product to be 0.2 per cent lower by the end of 2020.

Exports are also expected to take a hit from trade uncertainties and reduced investment. The bank projects that Canada’s GDP will be 0.3 per cent lower by the end of 2020 due to the negative impacts on exports.

Fiscal stimulus introduced in recent provincial budgets is expected to help offset these effects by adding about 0.4 per cent to Canada’s real GDP by the end of 2020.

On Wednesday, the bank also posted new economic forecasts with the release of its latest monetary policy report.

For 2018, it’s now predicting two per cent growth, as measured by real gross domestic product, compared to its 2.2 per cent prediction in January.

That rate represents a drop from the three per cent growth in 2017. The bank had been anticipating such moderation.

However, the bank also raised its growth projection for 2019 to 2.1 per cent, up from its previous prediction of 1.6 per cent. It expects growth to ease to 1.8 per cent in 2020.

For the first three months of 2018, the bank is predicting growth of about 1.3 per cent _ considerably lower than its January projection of 2.5 per cent.

The effects of sluggish exports and the housing markets’ responses to stricter mortgage rules played a big role in the disappointing numbers, the bank said.

It’s now predicting, however, the economy will rebound in the second quarter with 2.5 per cent growth, in part because of rising foreign demand. 

The Canadian Press

Copyright © 2018 Key Media Pty Ltd

Plan is to add a million square feet of office and commercial space downtown, sources say

John Mackie
The Province

Amazon is looking at renting the old post office in downtown Vancouver.

Real-estate sources say the online retail giant wants to add a million square feet of office and commercial space downtown, part of an expansion to double the Vancouver Amazon workforce to 2,000 people by 2020.

Amazon didn’t respond to requests for comment, and leasing agent Tony Astles of Bentall Kennedy said “any discussions we do or don’t have with tenants are confidential, sorry.”

The old post office is a mammoth 686,000-square-feet structure that occupies an entire block bounded by Georgia, Dunsmuir, Homer and Hamilton streets.

A proposed rezoning of the post office site was submitted to the city in November 2016 to build three towers on top of the existing seven-storey building. The design included a 17-storey office tower and 18- and 20-storey residential towers. The proposal was revised and resubmitted in May 2017 with three “slimmer” towers.

But a spokesperson for the City of Vancouver said “the applicant for the rezoning of the old post-office site has requested that the rezoning application be put on hold while they review their options for the site.”

Canada Post sold its former main downtown branch at 349 West Georgia St. in 2013, when it decided to move to a new building by the airport. The old post office was bought for $159 million by B.C. Investment Management Corp., one of Canada’s largest institutional investment managers.

The building opened in 1958, and is considered a fine example of the International Modern style. It was designed by McCarter and Nairne, the architects that designed the Marine Building, and is on Vancouver’s heritage register.

The interior is open and spacious. The biggest spaces are two storeys high and feature column-free areas that are almost as long as a football field. The building also has 2½ storeys of underground parking.

“It was built as a processing and distribution centre,” said John Atkin, a heritage expert. “So you had trucks come in, trucks go out, sorting, and big open spaces, so that you could run complex postal-sorting machines and conveyor belts, and all that stuff. So you have almost the perfect existing structure waiting there for a firm that would do stuff like Amazon, which is product in and product out.”

Amazon already has a large and growing presence in Metro Vancouver. In November, the Seattle company said it was leasing 150,000 sq. ft. of space in a nine-storey building that is going up at the southwest corner of Dunsmuir and Homer streets, which is across the street from the post office.

Amazon also rents space over seven floors of the Telus Garden tower at 520 West Georgia St., and has 50,000 sq. ft. of space through the shared office leasing firm WeWork at the Bentall III tower at 595 Burrard St.

In addition, Amazon has two local warehouses in New Westminster and Queensborough. The company also recently purchased Whole Foods, which has six locations in B.C., and owns AbeBooks in Victoria.

An estimated 1,000 people work for Amazon in downtown Vancouver, mainly in software and cloud development. But Vancouver isn’t on the short list of 20 cities Amazon selected as a possible second headquarters for its rapidly expanding business. The so-called HQ2 could bring an estimated $5 billion in investment to a community, along with 50,000 jobs.

© 2018 Postmedia Network Inc

Real Estate Council of BC examined

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The Province is launching a review of B.C.’s real estate regulators to make sure that British Columbians are effectively protected, announced Finance Minister Carole James. 

“Buying and selling property can be stressful, and people need to trust the professionals they are working with,” said James. “Our duty as a government is to make sure the regulatory system is protecting people and functioning effectively. We’re launching a review of the province’s real estate regulators, to make sure they’re acting in the best interest of British Columbians.”

The review will examine the roles and responsibilities of the Real Estate Council of British Columbia and the Office of the Superintendent of Real Estate. Topics under review include the appropriate structure and composition of the regulators, how they should communicate, mechanisms for resolving disputes, and how to divide responsibility for matters such as licensee qualifications and rule making. 

The purpose of this review is to ensure B.C.’s regulatory system is protecting consumers in the real estate market. The review will provide recommendations to the Minister of Finance for consideration by June 15, 2018.

Quick Facts:

• Dan Perrin, of Perrin, Thorau and Associates Ltd., will lead the review.
• Perrin is a highly experienced former public servant and has completed several other reviews for government.

Bank of Canada Interest Rate Announcement

Andy Blatchford
Canadian Real Estate Wealth

The Bank of Canada is maintaining its trend-setting interest rate as its careful assessment of the timing of future hikes continues amid a backdrop of moderating growth.

The central bank, which kept its rate at 1.25 per cent Wednesday, said slower first-quarter growth of about 1.3 per cent was largely a result of housing markets’ responses to stricter mortgage rules and sluggish exports. The bank had predicted the economy to expand by 2.5 per cent in the first three months of the year.

It’s expecting the economy to rebound in the second quarter with 2.5 per cent growth, in part because of rising foreign demand, to help Canada expand by two per cent for all of 2018. The economy saw three per cent growth in 2017.

“Canada’s economic growth has moderated, and the economy is operating close to capacity,” the bank said in its latest monetary policy report, which was released alongside the rate announcement.

“While a moderation was anticipated, temporary factors … are resulting in sizable short-term fluctuations in growth.”

The bank reiterated it expects further interest-rate hikes to be necessary over time and that it will follow a cautious, data-dependent approach when weighing future decisions.

“Some progress has been made on the key issues being watched closely by governing council, particularly the dynamics of inflation and wage growth,” the bank’s statement said.

“This progress reinforces governing council’s view that higher interest rates will be warranted over time, although some monetary policy accommodation will still be needed to keep inflation on target.”

The bank will also continue to watch the economy’s sensitivity to higher interest rates and how well it builds capacity through investment, which would enable Canada to lift growth beyond what is viewed as its potential ceiling without driving up inflation.

Signs suggest the economy has made some progress in building this capacity, the bank said.

The bank is also keeping a close watch on the evolution of external risks.

Exports and business investment in Canada have been held back by competitiveness challenges and trade-policy uncertainties, which include escalating geopolitical conflicts that risk damaging global expansion, the bank said.

It laid out estimates on the growth impacts on Canada due to tax reforms in the United States, which are expected to lure more investment south of the border. Due to these investment challenges, it predicts Canada’s gross domestic product to be 0.2 per cent lower by the end of 2020.

Exports are also expected to take a hit from reduced investment and trade uncertainties. The bank projects that Canada’s GDP will be 0.3 per cent lower by the end of 2020 due to the negative impacts on exports.

Fiscal stimulus introduced in recent provincial budgets is expected to help offset these effects by adding about 0.4 per cent to Canada’s real GDP by the end of 2020.

Governor Stephen Poloz introduced three rate hikes since last summer in response to an impressive economic run for Canada that began in late 2016. But due, in part, to factors such as mounting trade unknowns, Poloz has not raised the rate since January.

The bank offered an analysis Wednesday of some of the key indicators it’s watching ahead of rate decisions.

On inflation, the bank said temporary downward forces weighing on the rate have largely dissipated. Other transitory factors, including higher gasoline prices and recent minimum wage increases are now expected to raise inflation above the bank’s January predictions.

Canada’s annual pace of inflation in February sped up to 2.2 per cent _ its fastest pace in more than three years _ to creep above the central bank’s ideal target of two per cent. Meanwhile, the average of the agency’s three measures of core inflation, designed to omit the noise of more-volatile items like gasoline, climbed slightly above two per cent for the first time since February 2012.

For wage growth, the bank said despite recent improvements it remains below what would be expected if the economy no longer had slack in its labour force.

On Wednesday, the bank also released new economic forecasts in its monetary policy report.

For 2018, it’s now predicting two per cent growth, as measured by real gross domestic product, compared to its 2.2 per cent prediction in January.

The bank raised its growth projection for 2019 to 2.1 per cent, up from its previous prediction of 1.6 per cent, before easing to 1.8 per cent in 2020.

It noted that these readings would still be slightly above Canada’s estimated potential output for the next three years.

Copyright © 2018 Key Media Pty Ltd

Ephraim Vecina
Canadian Real Estate Wealth

Home sales in British Columbia plummeted last month compared with March of last year, but the B.C. Real Estate Association stated that the decline was not reflected in prices.

Sales figures released by the association for March showed that 7,409 homes changed hands last month, a decline of 24.6% over March 2017, while average property prices climbed 5.3% over the same period.

A news release from the association said that the average home sold for $726,930 last month. The BCREA attributed the climate of persistently high prices to the lack of properties available for sale, noting that the total of active listings has changed very little since March 2017, nudging a 12-year low across B.C.

Association chief economist Cameron Muir predicted that prices will continue to climb as long as the trend continues. He also criticized what he called the “burdensome” mortgage qualification rules that took effect in January, saying they have had the “predictable effect of swiftly curbing housing demand.”

 “You simply cannot pull as much as 20% of the purchasing power away from conventional mortgage borrowers and not create a downturn in consumer demand,” Muir said, as quoted by The Canadian Press.

B.C. home sales in March tallied $5.39 billion, a 20.6% tumble compared with March 2017. Meanwhile, quarterly sales dollar volumes since January have slipped 1.7% year-over-year to $13.9 billion.

Residential sales also fell 9.4% during the first three months of this year. On the other hand, the average price of a home increased 8.5% to just over $732,000 during the same period.

Copyright © 2018 Key Media Pty Ltd

Acquisition of 12.5 acre site formerly owned by Walmart represents, in square footage, largest private sale in Vancouver in 10 years

Naoibh O’Connor
Western Investor

Hungerford Properties has acquired two large industrial sites on Marine Drive totalling 15.5 acres — a 12.5 acre site at 86 Southeast Marine Dr. formerly owned by Walmart and a three-acre property at 396 Southwest Marine Dr. where a Kia Vancouver dealership currently operates.

Hungerford Properties is a Vancouver-based real estate business that invests, manages and develops properties across Western Canada.

A Dueck car dealership had, at one point, operated at 86 Southeast Marine Dr., but the site, which sits between Ontario and Main streets, has been vacant for about 15 years. Walmart wanted to open an outlet on the property, but the then-COPE-dominated city council rejected that proposal in an 8-3 vote back in 2005. (A Walmart later opened in East Vancouver on Grandview Highway near Boundary Road.)

“There are two other buildings [on the land], which had various tenants in the past, but the site has been basically boarded up for the last 15 years,” Michael Hungerford of Hungerford Properties told the Courier.

The land formerly owned by Walmart was assessed at $46,441,000 on B.C. Assessment’s 2018 assessment roll, while the Kia Vancouver site was assessed at $24,342,800.

The transaction for the Walmart site represents the largest private sale in the last 10 years in the city in terms of square footage, according to Hungerford.

“In the case of the Walmart site, it is an industrial zone and we plan to pursue redevelopment within that zoning,” he said.

“We’re very excited about the potential of the site to help address the demand for industrial [space] in the city of Vancouver particularly. And, it being such a large site, I think it will afford some flexibility of different building forms and it will end up really activating that neighbourhood in a positive way… I know the city is looking at how, generally, employment density and employment uses can be enhanced within the city and so we’ll be looking to work with the city on that and seeing what can be done.”

Kia Vancouver, meanwhile, will continue to operate on the property at 396 Southwest Marine Dr. until construction starts on a development, at which time it will have to relocate.

The site is beside the Marine Drive Canada Line station and the Marine Gateway development.

With the completion of the transit station and condo towers in recent years, Hungerford says the neighbourhood is among the fastest growing urban areas in Vancouver — it’s grown by 20 per cent in the last five years and is projected to see additional population growth of about 12 per cent by 2021 and 28 per cent by 2026.

About 50 per cent of Metro Vancouver’s population is within a half hour drive of the two sites, which makes them ideal locations for businesses, according to Hungerford.

“The Kia site right [near] the station absolutely would support office density.  In the case of the Walmart site, it’s industrial zoned so it really calls for more industrial emphasis in the types of tenants we anticipate,” he said. “We’ve invested in various neighbourhoods like Mount Pleasant in East Vancouver for decades. I think the time has come for south Vancouver to see some development and both of these particular sites can benefit from higher and better use, more employment density. It’s really an opportunity to create jobs and support local businesses.”

In a press release from Hungerford Properties, Darren Cannon, executive vice president at Colliers, stated: “Hungerford’s two, new strategic development sites will be able to capitalize on transit ridership numbers, which are at an all-time high, and will transform the area with newer, better and denser commercial uses, ultimately bringing more jobs, people and economic benefits to the area.”

Matthew MacLean, senior VP at Cushman & Wakefield, was quoted as saying the acquisitions will “kickstart a commercial revitalization” in the area.

“With transit connectivity and a unique complement of large and small users and high density residential, the area is prime for Vancouver’s next creative hub, much like Mount Pleasant and the Great Northern Way Campus,” MacLean said.

Copyright © 2018 Western Investor

Erik Hertzberg
Canadian Real Estate Wealth

Home sales in Canada’s third-largest city are still declining after the provincial government introduced new housing measures earlier this year.

Sales in Greater Vancouver fell 8.6 percent in March from a month earlier to 2,108 transactions, the fewest since 2013, data released Friday by the Canadian Real Estate Association show. That’s in contrast to the broader Canadian market, which showed signs of stabilizing in March. Aggregate prices in Vancouver still ticked up, rising 1.1 percent on the month.

Sales in the Pacific Coast city may fall further as buyers come to grips with stiffer taxes on purchases by foreigners and a new levy on vacant homes, steps unveiled by the British Columbia government in February to deal with property speculation. “We expect this market to begin stabilizing towards the end of the year, or in early-2019,” Michael Dolega, an economist at Toronto-Dominion Bank, wrote in a note to clients.

Benchmark prices, meanwhile, are up 16 percent in Vancouver from a year earlier, the CREA data show.

Copyright © 2018 Key Media Pty Ltd

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The Residences on Marine offers prime location, single-family luxury

Simon Briault
The Vancouver Sun

When you’re moving from a large, single-family home in West Vancouver, possibly one that you’ve been living in for many years and where you raised your children, it’s natural for you to think very carefully about your next move. Atti Group, a family company behind a new development of 16 homes in West Vancouver, is targeting just this type of discerning homebuyer.

The Residences on Marine is a three-storey building of 16 luxury condos and four retail spaces at 13^th Street and Marine Drive in the heart of Ambleside and just a block from the beach. The homes that are still available have two or three bedrooms and range in size between 950 and 1,321 square feet.

“There’s not a single investor or speculator in this building – not with this type of product in this location,” said Greg Zayadi, a senior vice-president at Rennie Marketing who is leading the sales and marketing of the project on behalf of Atti Group. “These buyers are, for the most part, downsizers from the local area and they’re taking their time. They will come and visit us two or three times over before making a decision.”

Zayadi said that Atti Group – led by father Siamak Tehrani and his two sons Arman and Sasan – has built dozens of multi-million-dollar, single-family homes in West Vancouver and on the North Shore. According to Zayadi, The Residences on Marine is one of their first multi-family concrete developments and this is the type of project the company is looking to focus on going forward.

“As single-family homebuilders, they are used to building these incredibly luxurious homes and they’re taking that same approach when it comes to the level of detail and the finishes on in this development,” Zayadi said. “There are some incredible details that you would really only do if you are a builder with the history that these guys have. It’s also because there’s only 16 homes. You would never do this if you had 100 or 200 homes so it’s a really exclusive offering.”

So, what exactly are these unique details and high-end luxuries? In the kitchens, there’s imported flat-panel Italian cabinetry with soft-close drawers from Arclinea, polished quartz stone countertops and full-height marble backsplashes. You’ll also get a professional-grade appliance package by Wolf and Sub-Zero. This includes a refrigerator with double freezer drawers and ice-maker, a stainless steel four-burner gas cooktop, a black and stainless-steel hood fan, stainless-steel wall and steam ovens and an Asko high-efficiency dishwasher.

In the bathrooms, the vanities are made in Italy and entirely clad in marble. You’ll also get mirrored Italian medicine cabinets with integrated LED lighting, solid polished marble countertops, chrome Kohler faucets and rain shower heads with hand showers. There are Italian marble mosaic tiled shower bases in master ensuites, soaker tubs with Italian marble base surrounds and Nuheat in-floor heating in all bathrooms.

“The site for this development is near and dear to the Tehranis’ hearts because they drive by it every day,”  Zayadi said. “They’ve been working with a very local team. Karl Gustavson, the architect, is on the North Shore, Cristina Oberti, the interior designer, lives in West Vancouver, and so do I as the lead on sales and marketing.”

The development will be built on a slight incline and all the homes will be on one level. The building will have an underground parkade, as well as a central courtyard in the middle at the level of the lane behind, allowing residents to walk straight into their homes. This also means that all the units will have windows on both sides, facing north and south. In addition, most homes will have skylights over the kitchens to provide natural light.

“We can talk about all the luxury, of course, but the main thing is that this is an incredible location that’s hard to ever replicate,” Zayadi said. “You’re right in the middle of Ambleside with Meinhardt, Earls, Heirloom and so many amenities opening up, along with the continuing development of Park Royal, which is about a 10-minute walk away.”

Ambleside Beach is just a block from this development. Known as West Vancouver’s gateway park, Ambleside provides spectacular views of Stanley Park and downtown Vancouver.

“The location is what really makes it truly worth the money,” Zayadi said. “You could paint the thing in gold and that wouldn’t really impact the overall value because really people are buying the opportunity to be in such a livable urban community. That’s really what’s driving this – 13^th and Marine Drive is an incredible spot to be in.”

The sales centre for The Residences on Marine is at 1347 Marine Drive and it’s open by appointment only. Prices for the homes that are still available start at $1,795,900 for a two-bedroom and two-bathroom home of 950 square feet and top out at $2,795,900 for a south-facing three-bedroom and two-bathroom home.

The Residences on Marine

Project location: 1347 Marine Drive, West Vancouver

Project size: 16 two- and three-bedroom condos ranging in size from 950 to 1,321 square feet, with prices starting from approximately $1,795,900

Developer: Atti Group

Architect: Karl Gustavson

Interior designer: Cristina Oberti Interior Design

Sales centre: 1347 Marine Drive, West Vancouver

Sales phone: 604-281-1878

Website: https://residencesonmarine.com

© 2018 Postmedia Network Inc.

B.C. government, United Church partner in new affordable housing developments

Linda Givetash
The Vancouver Sun

The United Church in British Columbia is stepping forward to help address the province’s affordable housing crisis by offering up some of its properties for development.

Premier John Horgan announced Friday that the province will spend $12.4 million to help develop 414 units in four cities, beginning with 75 units on church property in Coquitlam.

The 75 units will be designed for individuals, seniors and families with an average income between $50,000 and $100,000.

Horgan said its essential for the province to establish partnerships between landowners, developers and municipalities in order to build much needed affordable housing.

Terry Harrison with the B.C. Conference of the United Church of Canada said aging infrastructure and shrinking congregations have led the church to look for ways to redevelop its properties.

“We had to do something innovative to try to figure out how to re-purpose properties,” Harrison said. “Our faith teaches us to serve those in need, and here and now, one of the greatest needs is affordable housing for middle-income families.”

The church developed a plan to leverage its prime real estate in places like Metro Vancouver to support development in locations with lower-valued land, like in Nanaimo, she said.

The plan will allow the church to upgrade and take care of its facilities while also providing a benefit to the community with affordable housing, Harrison explained.

“While it’s imperative that we use these assets for the United Church, we must also provide practical benefits for the wider community. That’s sort of our ying-yang.”

Horgan said B.C. Housing’s new program HousingHub, which facilitates partnerships for new development, will support the church to get the projects through the permitting and planning phases quickly.

Construction for the Coquitlam development is set to begin in June.

The church will retain ownership of the properties, Horgan said, and will be responsible for paying the developers.

Penny Gurstein, director of the University of B.C.’s School of Regional and Community Planning, said partnership between governments, non-profits and the private sector are key in addressing the affordable housing across the country.

Gurstein said in an interview with The Canadian Press that having the private sector solely buy and develop land does not ensure affordability, especially over the long term.

But allowing faith-based communities to retain ownership of housing projects on their land prevents the properties from reverting back to the regular rental market pricing, she said.

“It isn’t just about trying to get the best financial returns on the land, it’s also trying to create something that has some social use.”

© 2018 Postmedia Network Inc.